Not tax advice. Computation tools only. Have a professional review before filing.
OOpenAccountants
openaccountants/skills/bahrain-vat.md
bahrain-vat.md390 lines15.8 KB
v20
1---
2name: bahrain-vat
3description: Use this skill whenever asked to prepare, review, or classify transactions for a Bahrain VAT return for any client. Trigger on phrases like "prepare VAT return", "Bahrain VAT", "NBR return", "file VAT Bahrain", or any request involving Bahrain VAT filing. Also trigger when classifying transactions for VAT purposes from bank statements, invoices, or other source data. This skill contains the complete Bahrain VAT classification rules, return box mappings, deductibility rules, reverse charge treatment, GCC transitional provisions, and filing deadlines. Bahrain applies VAT at 10% under Decree-Law No. 48 of 2018, administered by the National Bureau for Revenue (NBR). ALWAYS read this skill before touching any Bahrain VAT-related work.
4version: 2.0
5---
6 
7# Bahrain VAT Return Skill v2.0
8 
9## Section 1 -- Quick reference
10 
11| Field | Value |
12|---|---|
13| Country | Kingdom of Bahrain |
14| Standard rate | 10% (increased from 5% on 1 January 2022) |
15| Reduced rates | None |
16| Zero rate | 0% (exports, international transport, oil/gas, new buildings for residential use, specified foodstuffs, healthcare, education) |
17| Exempt supplies | Financial services (margin-based), bare land, local passenger transport, residential rental |
18| Return form | NBR VAT Return (electronic, via NBR portal) |
19| Filing portal | https://www.nbr.gov.bh |
20| Authority | National Bureau for Revenue (NBR) |
21| Currency | BHD (Bahraini Dinar) |
22| Filing frequency | Monthly (turnover > BHD 3,000,000); Quarterly (all others) |
23| Deadline | Last day of month following period end |
24| Mandatory registration | BHD 37,500 annual taxable supplies |
25| Voluntary registration | BHD 18,750 annual taxable supplies |
26| Primary legislation | Decree-Law No. 48 of 2018; Resolution No. 12 of 2018 (Executive Regulations); Resolution No. 33 of 2021 (rate increase) |
27| Contributor | Open Accounting Skills Registry |
28| Validated by | Pending -- requires validation by licensed Bahrain tax advisor |
29| Validation date | Pending |
30| Last research update | April 2026 |
31 
32**Conservative defaults:**
33 
34| Ambiguity | Default |
35|---|---|
36| Unknown rate on a sale | 10% |
37| Unknown VAT status of a purchase | Not deductible |
38| Unknown counterparty country | Domestic Bahrain |
39| Unknown B2B vs B2C for GCC customer | B2C, charge 10% |
40| Unknown business-use proportion | 0% recovery |
41| Unknown blocked-input status | Blocked |
42 
43---
44 
45## Section 2 -- Required inputs and refusal catalogue
46 
47### Required inputs
48 
49**Minimum viable** -- bank statement for the period in CSV, PDF, or pasted text covering the full period. Acceptable from NBB, BBK, Ahli United, BisB, SICO, Al Baraka, Ithmaar, or any other Bahraini or international bank.
50 
51**Recommended** -- sales invoices (especially for zero-rated and GCC supplies), purchase invoices for any input VAT claim above BHD 50, the client's VAT registration number.
52 
53**Ideal** -- complete invoice register, prior period VAT return, reconciliation of credit brought forward.
54 
55**Refusal policy if minimum is missing -- SOFT WARN.** If no bank statement at all, hard stop. If bank statement only without invoices, proceed but record: "This return was produced from bank statement alone. Reviewer must verify input VAT claims are supported by compliant tax invoices."
56 
57### Refusal catalogue
58 
59**R-BH-1 -- VAT group intra-group supplies.** Trigger: client is part of a VAT group. Message: "Intra-group supplies within a Bahrain VAT group are outside the scope of VAT. This skill does not handle VAT group consolidation. Escalate to licensed tax advisor."
60 
61**R-BH-2 -- Oil and gas sector.** Trigger: client operates in upstream oil/gas. Message: "Oil and gas operations have specific zero-rating rules under Article 68. Escalate to specialist tax advisor."
62 
63**R-BH-3 -- Partial exemption complex.** Trigger: client makes both taxable and exempt supplies with no agreed pro-rata. Message: "Partial exemption requires an NBR-agreed apportionment method. Escalate to licensed tax advisor."
64 
65---
66 
67## Section 3 -- Supplier pattern library
68 
69Match by case-insensitive substring on counterparty name. If none match, fall through to Section 5.
70 
71### 3.1 Bahraini banks (fees: exempt -- exclude)
72 
73| Pattern | Treatment | Notes |
74|---|---|---|
75| NBB, NATIONAL BANK OF BAHRAIN | EXCLUDE for bank charges/fees | Margin-based financial service, exempt |
76| BBK, BANK OF BAHRAIN AND KUWAIT | EXCLUDE for bank charges/fees | Same |
77| AHLI UNITED, AUB | EXCLUDE for bank charges/fees | Same |
78| BISB, AL SALAM BANK | EXCLUDE for bank charges/fees | Same |
79| AL BARAKA, ITHMAAR | EXCLUDE for bank charges/fees | Same |
80| INTEREST, LOAN, REPAYMENT | EXCLUDE | Financial transaction, out of scope |
81 
82### 3.2 Government and regulatory (exclude)
83 
84| Pattern | Treatment | Notes |
85|---|---|---|
86| NBR, NATIONAL BUREAU FOR REVENUE | EXCLUDE | Tax payment |
87| LMRA, LABOUR MARKET | EXCLUDE | Government levy |
88| SIO, SOCIAL INSURANCE | EXCLUDE | Social insurance contribution |
89| MOIC, MINISTRY OF INDUSTRY | EXCLUDE | Government fee |
90| CUSTOMS, BAHRAIN CUSTOMS | Check for import VAT | Customs duty exclude; import VAT recoverable |
91| TAMKEEN | EXCLUDE | Government support |
92 
93### 3.3 Utilities
94 
95| Pattern | Treatment | Notes |
96|---|---|---|
97| EWA, ELECTRICITY AND WATER | Domestic 10% | Standard-rated utility |
98| BATELCO, STC BAHRAIN, ZAIN BAHRAIN | Domestic 10% | Telecoms, standard-rated |
99 
100### 3.4 SaaS and digital services
101 
102| Pattern | Billing entity | Treatment | Notes |
103|---|---|---|---|
104| GOOGLE, MICROSOFT, ADOBE, META | Typically non-GCC | Reverse charge 10% | Non-resident digital service |
105| AWS, AMAZON WEB SERVICES | Non-GCC or GCC entity -- check | Reverse charge 10% | Verify billing entity |
106| ZOOM, SLACK, NOTION, ANTHROPIC, OPENAI | US entities | Reverse charge 10% | Non-resident |
107 
108### 3.5 Insurance (exempt -- exclude)
109 
110| Pattern | Treatment | Notes |
111|---|---|---|
112| SOLIDARITY, AXA BAHRAIN, GIG BAHRAIN | EXCLUDE | Life insurance exempt; general insurance at 10% -- check policy type |
113 
114### 3.6 Payroll and transfers (exclude)
115 
116| Pattern | Treatment | Notes |
117|---|---|---|
118| SALARY, WAGES, PAYROLL | EXCLUDE | Employment cost, out of scope |
119| GOSI, SOCIAL INSURANCE ORGANIZATION | EXCLUDE | Social insurance |
120| OWN TRANSFER, INTERNAL | EXCLUDE | Internal movement |
121| DIVIDEND | EXCLUDE | Out of scope |
122 
123---
124 
125## Section 4 -- Worked examples
126 
127### Example 1 -- Reverse charge on non-resident SaaS
128 
129**Input line:** `05.01.2026 ; NOTION LABS INC ; DEBIT ; Monthly plan ; USD 16.00 ; BHD 6.03`
130 
131**Reasoning:** Notion Labs Inc is a US entity. No VAT on invoice. Non-resident supplying services to Bahrain. Reverse charge at 10%. Both output and input reported. Net effect zero for fully taxable business.
132 
133**Output:**
134 
135| Date | Counterparty | Net | VAT | Rate | Output box | Input box |
136|---|---|---|---|---|---|---|
137| 05.01.2026 | NOTION LABS INC | 6.03 | 0.60 | 10% | Imported services output | Imported services input |
138 
139### Example 2 -- Standard domestic sale
140 
141**Input line:** `10.01.2026 ; AL JAZEERA TRADING ; CREDIT ; Invoice 2026-001 ; +5,000.00 ; BHD`
142 
143**Reasoning:** Domestic sale to Bahraini customer. Standard rate 10%. Output VAT = BHD 500.
144 
145**Output:**
146 
147| Date | Counterparty | Net | VAT | Rate | Box |
148|---|---|---|---|---|---|
149| 10.01.2026 | AL JAZEERA TRADING | 5,000.00 | 500.00 | 10% | Standard rated sales |
150 
151### Example 3 -- Entertainment (blocked)
152 
153**Input line:** `15.01.2026 ; GULF HOTEL BAHRAIN ; DEBIT ; Client dinner ; -250.00 ; BHD`
154 
155**Reasoning:** Entertainment expense. Input VAT blocked under Ministerial Order No. 14/2019. No recovery.
156 
157**Output:**
158 
159| Date | Counterparty | Gross | Net | VAT recovery | Note |
160|---|---|---|---|---|---|
161| 15.01.2026 | GULF HOTEL BAHRAIN | 250.00 | 250.00 | 0 | Blocked: entertainment |
162 
163---
164 
165## Section 5 -- Classification rules
166 
167### 5.1 Standard rate 10%
168 
169Default rate for all taxable supplies not specifically zero-rated or exempt. Applies to most goods and services supplied in Bahrain.
170 
171Legislation: Decree-Law No. 48/2018, Article 56.
172 
173### 5.2 Zero-rated supplies (0%, input VAT recoverable)
174 
175- Exports of goods outside Bahrain (with proof)
176- Exports of services to non-GCC recipients
177- International transport of goods and passengers
178- First supply of new residential buildings (within 3 years of completion)
179- Specified foodstuffs (basic necessities list per NBR)
180- Healthcare services (by licensed providers)
181- Education services (by licensed institutions)
182- Oil and gas sector supplies (Article 68)
183- Supplies to qualifying free zones
184 
185Legislation: Decree-Law No. 48/2018, Articles 59-68.
186 
187### 5.3 Exempt supplies (no VAT, no input recovery)
188 
189- Financial services (margin-based: interest, forex spreads)
190- Bare land
191- Local passenger transport
192- Residential rental
193- Life insurance
194 
195Legislation: Decree-Law No. 48/2018, Articles 64-68.
196 
197### 5.4 GCC transitional rules
198 
199- Supplies to VAT-registered businesses in implementing states (SA, UAE, OM): standard-rated in Bahrain at 10%
200- Supplies to non-implementing states (KW, QA): treated as exports (zero-rated) for goods; services follow place-of-supply rules
201- Imports from GCC implementing states: reverse charge applies
202 
203Legislation: GCC Unified VAT Agreement; Decree-Law No. 48/2018.
204 
205---
206 
207## Section 6 -- VAT return form structure
208 
209### Output section
210 
211| Box | Description | Mapping |
212|---|---|---|
213| 1 | Standard rated sales (10%) | Domestic taxable supplies |
214| 2 | Sales to GCC registered customers | Intra-GCC taxable |
215| 3 | Zero-rated domestic sales | Healthcare, education, new buildings, foodstuffs |
216| 4 | Zero-rated exports | Exports outside Bahrain/GCC |
217| 5 | Exempt sales | Financial, land, residential rental |
218| 6 | Total sales | Sum |
219| 7 | Output VAT on standard rated | 10% of Box 1+2 |
220| 8 | Adjustments to output | Credit notes |
221| 9 | VAT on imports (goods) | Customs VAT |
222| 10 | VAT on imports (services) | Reverse charge output |
223| 11 | Total output VAT | 7+8+9+10 |
224 
225### Input section
226 
227| Box | Description | Mapping |
228|---|---|---|
229| 12 | Standard rated purchases | Local purchases with VAT |
230| 13 | Imports (goods) | From customs entries |
231| 14 | Imports (services) | Reverse charge input |
232| 15 | Total input VAT | Sum of allowable input |
233| 16 | Adjustments | Blocked items, apportionment |
234| 17 | Allowable input VAT | 15 minus 16 |
235 
236### Net calculation
237 
238| Box | Description | Formula |
239|---|---|---|
240| 18 | Net VAT | 11 minus 17 |
241| 19 | Credit brought forward | Prior period |
242| 20 | Net payable / (refundable) | 18 minus 19 |
243 
244---
245 
246## Section 7 -- Reverse charge and imports
247 
248### Reverse charge on imported services
249 
250When a Bahrain VAT-registered person receives services from a non-resident not registered in Bahrain:
2511. Self-assess output VAT at 10% (Box 10)
2522. Claim input VAT at 10% (Box 14) if for taxable supplies
2533. Net effect zero for fully taxable businesses
254 
255Legislation: Decree-Law No. 48/2018, Article 34.
256 
257### Import of goods
258 
259- VAT at 10% on CIF value plus customs duty
260- Collected by Bahrain Customs at point of entry
261- Recoverable as input VAT if goods are for taxable supplies
262 
263### GCC imports
264 
265- Goods from GCC implementing states: reverse charge mechanism
266- Goods from non-implementing states: treated as third-country imports
267 
268---
269 
270## Section 8 -- Deductibility and blocked input
271 
272### Blocked input tax
273 
274Legislation: Ministerial Order No. 14/2019.
275 
276- Motor vehicles for personal transport (unless taxi, car hire, driving instruction, or dealer stock)
277- Entertainment, hospitality, and recreation
278- Personal-use goods and services
279- Club memberships (recreational)
280- Purchases without valid tax invoice
281 
282### Partial exemption
283 
284If business makes both taxable and exempt supplies, input VAT on common costs must be apportioned.
285 
286`Recovery % = Taxable Supplies / Total Supplies * 100`
287 
288Reviewer must confirm method with NBR.
289 
290---
291 
292## Section 9 -- Filing, deadlines, and penalties
293 
294| Obligation | Period | Deadline |
295|---|---|---|
296| VAT return (monthly) | Monthly | Last day of month following period |
297| VAT return (quarterly) | Quarterly | Last day of month following quarter |
298| Payment | Same as return | Same deadline |
299 
300### Penalties
301 
302| Violation | Penalty |
303|---|---|
304| Late filing | BHD 500 minimum; 5% of unpaid tax for each month |
305| Late payment | 5% of unpaid tax per month |
306| Failure to register | BHD 5,000 to BHD 10,000 |
307| Incorrect return | BHD 1,000 to BHD 5,000 |
308| Tax evasion | BHD 10,000 minimum + imprisonment |
309 
310---
311 
312## Section 10 -- Edge cases, test suite, and escalation
313 
314### Edge cases
315 
316**EC1 -- SaaS from US provider.** Company subscribes to AWS. No VAT on invoice. Resolution: reverse charge at 10%. Output Box 10, input Box 14. Net zero.
317 
318**EC2 -- Export of goods.** Bahraini manufacturer ships goods to Oman. Resolution: zero-rated export (Box 4). Input VAT fully recoverable.
319 
320**EC3 -- Motor vehicle (blocked).** Company buys sedan for director. Resolution: input VAT blocked. Full cost including irrecoverable VAT.
321 
322**EC4 -- GCC supply to non-implementing state.** Sale of goods to Qatar. Resolution: treated as export, zero-rated for goods.
323 
324**EC5 -- New residential building.** Developer sells newly built apartment within 3 years. Resolution: zero-rated (first supply of new residential property). Input VAT recoverable.
325 
326**EC6 -- Financial services (exempt).** Bank earns interest income. Resolution: exempt supply. No output VAT. Related input VAT not recoverable.
327 
328**EC7 -- Mixed supply.** Company provides both taxable consulting and exempt financial advisory. Resolution: partial exemption applies. Reviewer must confirm apportionment.
329 
330**EC8 -- Credit note.** Supplier issues credit note for returned goods. Resolution: reduce output VAT in period issued. Buyer adjusts input VAT.
331 
332### Test suite
333 
334**Test 1 -- Standard sale.** Input: company sells goods BHD 10,000 net. Expected: output VAT = BHD 1,000 (10%).
335 
336**Test 2 -- Local purchase.** Input: company buys supplies BHD 5,000 + BHD 500 VAT. Expected: input VAT BHD 500 recoverable.
337 
338**Test 3 -- Reverse charge.** Input: company receives IT services from UK firm, BHD 2,000, no VAT. Expected: output VAT BHD 200, input VAT BHD 200. Net zero.
339 
340**Test 4 -- Export.** Input: exporter ships goods BHD 50,000. Expected: zero-rated. No output VAT. Input recoverable.
341 
342**Test 5 -- Blocked entertainment.** Input: client dinner BHD 300 + BHD 30 VAT. Expected: input VAT = 0 (blocked).
343 
344**Test 6 -- Exempt supply.** Input: bank earns interest BHD 100,000. Expected: exempt. No VAT. Related input not recoverable.
345 
346### Reviewer escalation protocol
347 
348```
349REVIEWER FLAG
350Tier: T2
351Transaction: [description]
352Issue: [what is ambiguous]
353Options: [list treatments]
354Recommended: [which and why]
355Action Required: Licensed Bahrain tax advisor must confirm.
356```
357 
358```
359ESCALATION REQUIRED
360Tier: T3
361Transaction: [description]
362Issue: [outside scope]
363Action Required: Do not classify. Refer to licensed tax advisor.
364```
365 
366### Out of scope -- direct tax
367 
368- Corporate Income Tax: 0% (no CIT in Bahrain)
369- Personal Income Tax: None
370- Social insurance (GOSI): employer 12%, employee 7% (Bahraini); employer 3%, employee 1% (non-Bahraini)
371- Excise tax: tobacco 100%, energy drinks 100%, carbonated drinks 50%
372 
373### Prohibitions
374 
375- NEVER apply any rate other than 10%, 0%, or exempt
376- NEVER allow input VAT recovery on blocked categories
377- NEVER ignore reverse charge on services from non-residents
378- NEVER treat non-implementing GCC states (Kuwait, Qatar) as implementing states
379- NEVER compute any number -- engine handles arithmetic
380- NEVER file without checking credit brought forward
381- NEVER accept invoices without valid VAT registration number for input claims
382 
383---
384 
385## Disclaimer
386 
387This skill and its outputs are provided for informational and computational purposes only and do not constitute tax, legal, or financial advice. Open Accountants and its contributors accept no liability for any errors, omissions, or outcomes arising from the use of this skill. All outputs must be reviewed and signed off by a qualified professional before filing or acting upon.
388 
389The most up-to-date, verified version of this skill is maintained at [openaccountants.com](https://openaccountants.com).
390 

Run this skill, then get an accountant to check it

After running the full skill pack in Claude, sign up and upload your worksheet. We'll connect you with a trusted accountant in our network who can review your numbers before you file.

Sign up to submit a review

Quality

Q2: Research-verified

Deep research against tax authority sources. Not yet tested on real data.

Needs real client data + practitioner sign-off to reach Q1.

Accountant Review

Unverified
0/34

About

Use this skill whenever asked to prepare, review, or classify transactions for a Bahrain VAT return for any client. Trigger on phrases like "prepare VAT return", "Bahrain VAT", "NBR return", "file VAT Bahrain", or any request involving Bahrain VAT filing. Also trigger when classifying transactions for VAT purposes from bank statements, invoices, or other source data. This skill contains the complete Bahrain VAT classification rules, return box mappings, deductibility rules, reverse charge treatment, GCC transitional provisions, and filing deadlines. Bahrain applies VAT at 10% under Decree-Law No. 48 of 2018, administered by the National Bureau for Revenue (NBR). ALWAYS read this skill before touching any Bahrain VAT-related work.

BHty-2025

BH skill: